News Analysis: Challenges to haunt Indonesia's newly elected president

JAKARTA, 23 July (Xinhua) -- The reform-minded Governor of Indonesian Capital Jakarta Joko Widodo was declared the winner of 2014 presidential election, bringing the hopes of good governance and sound reforms to the country.

The official results released Tuesday night by the Indonesia's General Elections Commission, locally called KPU showed Widodo had received almost 71 million votes, or 53.15 percent of the 133 million votes cast on July 9. This compares to 46.85 percent of votes for Widodo's rival, the 63-year-old former general Prabowo Subianto.

Joko Widodo, popularly known as "Jokowi" by locals, is widely considered as a down-to-earth outsider in a political scene long dominated by traditional elites. His can-do approach, clean track record and unassuming style have won him huge followings and supports from the grass-roots and many hope he can move forward on major reforms.

However a slim victory in the country's closest ever presidential election implicates that Jokowi didn't get strong mandate to push changes through a fragmented parliament after taking office in October.

Jokowi's Indonesian Democratic Party of Struggle (PDI-P), the largest opposition headed by the former President Megawati Sukarnoputri, leads a coalition of four parties that control only 207 seats or 37 percent in the parliament which compares his rival' s 63 percent.

Prabowo's six-party coalition has signed an agreement to cement permanent coalition last week, if none of parties jump ship, the coalition will be a strong opposition in the coming parliament and will have a great impact on the effectiveness of Jokowi's new administration.

Muhammad Qodari, an Indonesian political analyst told Xinhua after KPU's announcement that with the fragmented parliament to contend Jokowi as well as his own somehow unreliable rainbow coalition, the effectiveness of the business of his government could be undermined.

Parliamentary elections in April saw PDI-P winning only 18.9 percent of the votes, forcing Jokowi to forge a coalition to get over the 25 percent threshold needed to run for the presidency.

The necessity of coalition building to bid for the presidency in Indonesia means the political process later will go along with compromise and horse trading.

Incumbent President Susilo Bambang Yudhoyono who by law cannot run for a third term is frequently criticized for prioritizing coalition harmony over pushing through a firm decision. What's worse, during Yudhoyono's second term, ruling coalition members even voted against government policy in the parliament billing.

Pushing for reforms in the world's largest archipelago with over 240 million people and a notoriously fractious parliament will not be an easy job for the new president, Qodari said.

Jokowi, 53, a former furniture dealer, has set an easy-to-reach target of 7 percent growth per year for the Indonesian economy, promised to build human resources through education, reduce poverty by budget disbursement and simplify business licenses.

Expert said Jokowi's agendas are very rational for the national development, but the new administration's top priority should be to cut fuel subsidies to control the country's widening budget deficit.

Fuel subsidies which cost the government around 20 billion U.S. dollars a year or more than 20 percent of the annual budget have kept Indonesia's fuel prices one of the lowest in the world.

The subsidies have spurred crude oil consumption and imports, widened trade deficit, and dragged down the currency Rupiah. Most importantly, they sap the budget and waste funds that could otherwise be used to build infrastructure and improve the education system.

Reforming the fuel subsidy scheme is by no means popular and will cause great political risk in South East Asia's largest economy. Widespread riots over proposed cuts and parliamentary deadlocks have been seen before; the climbing inflation will bring more poor and smash government's poverty-alleviation efforts.

National demonstration erupted last year when the incumbent government raised the subsidized fuel prices, forcing President Yudhoyono to provide a compensation of around 1 billion dollars to poor families.

"Cutting fuel subsidies is very sensitive, the previous presidents are very mindful and always leave the 'bomb' to their successors," Pande Raja Silalahi, a senior economist at the Jakarta-based think tank Center for Strategic and International Studies (CSIS) told Xinhua on Wednesday.

Given Indonesia's poor infrastructure, lagging education system, rampant corruption and slowing economy, Jokowi's honeymoon period as a new president will be very short, his administration needs to cut the costly fuel subsidies as soon as possible and wisely allocate the budget to address these problems, Pande said.

Growth of the G20 economy has slowed down to 5.21 percent in the first quarter this year, the weakest pace since 2009, and has never passed a pace of 7 percent on an annual basis since the 1997 Asian financial crisis. U.S.-based World Bank has predicted Indonesia's full year economic growth at 5.2 percent.

"If the controversial fuel subsidies could not be cut, the longer Jokow's shopping list of reform is, a stronger headache he will feel," Pande said.